ACC-650 TOPIC 5 ASSIGNMENTQuestion 6

In response to a growing awareness of gluten allergies, Wildhorse Bakery tried using gluten-free flour in its three most popular cookies. After several attempts and a lot of inedible cookies, the company perfected new recipes that yield delicious gluten-free cookies. The costs of producing a batch of 100 cookies are as follows:

		Chocolate Chip		Sugar		Oatmeal Raisin
Sales price			$125				$125				$125
Variable cost			$75				$80				$78
Fixed cost			17				14				21
Total cost			92				94				99
Gross profit			$33				$31				$26
Pounds of flour			2.5				2.5				2

(a)

Assuming no raw material constraints and unlimited demand for cookies, calculate contribution margin per batch for Chocolate Chip, Sugar, Oatmeal Raisin cookies. (Round answers to 2 decimal places, e.g. 52.75.)

Cookies		Contribution Margin
Chocolate Chip		$enter a dollar amount rounded to 2 decimal places
Sugar		$enter a dollar amount rounded to 2 decimal places
Oatmeal Raisin		$enter a dollar amount rounded to 2 decimal places

What type of cookie would maximize the company's contribution margin?

select a type of cookie Chocolate ChipSugarOatmeal Raisin

(b)

Assume that, based on typical customer demand, Wildhorse will sell 11,800 batches of chocolate chip cookies, 7,800 batches of sugar cookies, and 9,800 batches of oatmeal raisin cookies. What will the company's contribution margin be?

The company's contribution margin

$enter the company's contribution margin in dollars

(c)

Wildhorse's flour supplier has announced a shortage of gluten-free flour. As a result, Wildhorse will only be able to purchase 49,100 pounds of flour. How many batches of each type of cookie should the company bake?

		Batches
Chocolate Chip		enter a number of batches
Sugar		enter a number of batches
Oatmeal Raisin		enter a number of batches

What will the company's contribution margin be?

The company's contribution margin

$enter the company's contribution margin in dollars

(d)

If Wildhorse uses gluten-free flour in other products, will the allocation you recommend in part (c) change?

select an option YesNo